>>18459491My Japanese teacher regularly made the comparison of California to the size of Japan. X&Y's Kalos was their first time compressing a whole continent into a game. Prior to that, we have only had metro areas and prefectures. California could easily be broken up into a San Francisco and Los Angeles region, like how Unova was really the New York metro area. Of course with the extra memory on the 3DS they may be doing more ambitious things.
There are plenty of countries left for them to do, but it comes down to what they view as "exotic" or "unique." Korea/China might seem neat to westerners, but for people in the Japanese mainlands, it's the next country over and the cultures have interacted so much that it's really not all that interesting to them.
France is one of those places people outside of Europe all dream of going to because the idea of sitting in a cafe or the Eiffel Tower has some kind of romantic charm. That's why we got Kalos
Hawaii would be an interesting choice, it's exotic to a good number of people and would provably fit the size requirements.
The Middle east and Africa are probably off limits for the time being since aside from South Africa, there isn't really a good stable country right now, although Egypt would probably be the go to region for something exotic.
South America has the rainforests, mountains, and more importantly, has stable countries that wouldn't cause controversy if depicted in a game.